<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BROUGHTON FOODS COMPANY
-----------------------
(Name of Registrant as Specified in Its Charter)
BROUGHTON FOODS COMPANY
-----------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
----------------------------------------------------
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BROUGHTON FOODS COMPANY
210 NORTH SEVENTH STREET
MARIETTA, OHIO 45750
April 3, 1998
Dear Shareholder:
We are pleased to enclose your Notice of Annual Meeting and Proxy
Statement for the annual meeting of shareholders (the "Annual Meeting") of
Broughton Foods Company (the "Company") to be held on April 29, 1998, at 11:00
a.m., local time, at the Lafayette Hotel, 101 Front Street, Marietta, Ohio
45750.
At the Annual Meeting, you will be asked to adopt an Amended and
Restated Code of Regulations and to elect directors of the Company.
This is our first Annual Meeting since completing the Company's
initial public offering of common shares. We have had an exciting and eventful
year and look forward to reviewing our accomplishments with our shareholders.
Very truly yours,
/s/ PHILIP E. CLINE
Philip E. Cline
President and
Chief Executive Officer
<PAGE> 3
BROUGHTON FOODS COMPANY
210 NORTH SEVENTH STREET
MARIETTA, OHIO 45750
(740) 373-4121
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the shareholders of
BROUGHTON FOODS COMPANY:
Notice is hereby given that the annual meeting of shareholders of
Broughton Foods Company (the "Company") will be held on April 29, 1998 at 11.00
a.m., local time, at the Lafayette Hotel, 101 Front Street, Marietta, Ohio, for
the following purposes:
(1) To adopt an Amended and Restated Code of Regulations;
(2) To elect twelve directors to a term of one year or until their
successors have been elected and qualified, or, if Proposal 1 is not
adopted, to elect eleven directors to a one year term or until their
successors have been elected and qualified; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on March 23, 1998
are entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors
/s/ DAVID J. BROUGHTON
David J. Broughton
Corporate Secretary
Marietta, Ohio
April 3, 1998
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BROUGHTON FOODS COMPANY
210 NORTH SEVENTH STREET
MARIETTA, OHIO 45750
(740) 373-4121
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
------------
INTRODUCTION
The Board of Directors of Broughton Foods Company (the "Company"), the
executive offices of which are located at 210 North Seventh Street, Marietta,
Ohio 45750, hereby solicits your proxy in the form enclosed for use at the
annual meeting of shareholders to be held on April 29, 1998, at 11:00 a.m., or
any adjournment or adjournments thereof (the "Annual Meeting"). The expenses
of soliciting your proxy will be borne by the Company. This Proxy Statement
and the accompanying form of proxy are first being released for mailing to the
shareholders on or about April 3, 1998.
At the Annual Meeting, shareholders will be asked to adopt an Amended
and Restated Code of Regulations and to elect twelve directors of the Company
to serve a one-year term, provided, however, if the Amended and Restated Code
or Regulations is not adopted, the shareholders will be asked to elect eleven
directors of the Company to serve a one-year term.
We urge you to date, sign and return your proxy in the enclosed
envelope promptly to make certain that your shares will be voted at the Annual
Meeting.
MEETING INFORMATION
DATE, TIME AND PLACE
The Annual Meeting will be held on Wednesday, April 29, 1998, at 11:00
a.m., local time, at the Lafayette Hotel, 101 Front Street, Marietta, Ohio
45750.
RECORD DATE; VOTING RIGHTS
Only shareholders of record at the close of business on March 23, 1998
will be entitled to vote at the Annual Meeting. On March 23, 1998, there were
5,774,335 outstanding common shares, par value $1.00 per share ("Common
Shares"), each of which is entitled to one vote. The presence in person or by
proxy at the Annual Meeting of the holders of a majority of the outstanding
Common Shares will constitute a quorum for the transaction of business.
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With respect to Proposal 1, approval will require the affirmative vote
of the holders of a majority of Common Shares entitled to vote. An abstention
or failure to vote will have the effect of a vote against the proposal.
With respect to Proposal 2, the twelve nominees for election as
director, or, if Proposal 1 is not adopted, the eleven nominees for election as
director, who receive the greatest number of votes cast at the Annual Meeting,
assuming that a quorum is present, will be elected as director. A withheld
vote will not have any effect on the outcome of the vote for election of the
director.
Brokers who hold Common Shares in street name may not have the
authority to vote on certain matters for which they have not received
instructions from beneficial owners. Such broker non-votes (arising from the
lack of instructions from beneficial owners) will be treated as a vote against
Proposal 1. Such broker non-votes, although present for quorum purposes, will,
however, not affect the outcome of the vote on Proposal 2.
Under the General Corporation Law of Ohio (the "GCLO"), if notice in
writing is given by any shareholder to the President or any Vice President or
the Secretary of the Company, not less than forty-eight hours before the time
fixed for holding the meeting, that the shareholder desires that the voting for
election of directors shall be cumulative, and if an announcement of the giving
of such notice is made upon the convening of the meeting, each shareholder will
have cumulative voting rights. Cumulative voting means that each shareholder
is entitled to that number of votes equal to the number of shares that he owns
multiplied by the number of directors to be elected. Each shareholder may cast
all of his votes for a single nominee or may distribute his votes among as many
nominees as he sees fit. If the election of directors is by cumulative voting,
the persons appointed by the accompanying proxy intend to cumulate the votes
represented by the proxies they receive and distribute such votes in accordance
with their best judgment. Those nominees receiving the largest number of votes
for the director positions to be filled will be elected to those positions.
VOTING AND REVOCATION OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the Common Shares
represented thereby will be voted in accordance with the instructions marked
thereon. Executed but unmarked proxies will be voted "FOR" the adoption of the
Amended and Restated Code of Regulations and "FOR" the nominees proposed by the
Board of Directors. The duly appointed proxies may, in their discretion, vote
upon such other matters as may properly come before the Annual Meeting.
Any proxy may be revoked at any time before it is exercised by giving
written notice of such revocation or delivering a later dated proxy to the
Corporate Secretary of the Company prior to the meeting, or by notice of
revocation in open meeting.
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SOLICITATION OF PROXIES
The cost of soliciting proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its directors, officers and regular employees, may also
solicit proxies personally or by telephone. The Company also will request
persons, firms and corporations holding Common Shares in their names or in the
name of their nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from the beneficial owners and will reimburse
the holders for their reasonable expenses in so doing. The Company has engaged
the services of Wachovia Bank of North Carolina, N.A. for the purpose of
assisting in the solicitation of proxies at a cost of $1,285 plus the
reimbursement of certain expenses.
PROPOSAL 1--ADOPTION OF AMENDED AND RESTATED
CODE OF REGULATIONS
GENERAL
On March 18, 1998, the Board of Directors unanimously approved and
recommended that the shareholders approve and adopt an Amended and Restated
Code of Regulations for the Company (the "New Regulations"). The Company's
current Code of Regulations (the "Current Regulations") was adopted in 1966.
The New Regulations are being proposed in order to modernize the Company's Code
of Regulations and to conform the Code of Regulations to the general
requirements of Ohio law and standard corporate practices and procedures. The
following is a summary of the significant differences between the Current
Regulations and the New Regulations. The proposed Amended and Restated Code of
Regulations is set forth in Exhibit A to this Proxy Statement and is
incorporated herein by reference. The following should be read in conjunction
with, and is qualified in its entirety by reference to Exhibit A.
SHAREHOLDER ACTION WITHOUT A MEETING
The Current Regulations allow shareholders of the Company to take
action without a meeting if such action is authorized in a writing signed by
all of the shareholders that would be entitled to notice of a meeting for such
purpose. Article I, Section 6 of the New Regulations would eliminate the
ability of the shareholders to take any action without a meeting duly called.
The Board of Directors believes that it is in the best interest of the Company
and its shareholders that shareholders be given the opportunity at a meeting to
discuss any significant corporate action with the management and board of
directors and vote on the matter. In addition, shareholder actions at meetings
represent an effective method of avoiding the disenfranchisement of minority
shareholders through the use of written consent solicitation. The Board of
Directors believes that this provision will have a negligible impact on the
Company's shareholders under current law. The GCLO currently requires
unanimous shareholder approval of any shareholder action to be taken without a
meeting. Given the Company's broad shareholder base, the Board of Directors
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believes it would be difficult for any action to be taken without a meeting.
Nevertheless, if the GCLO were amended, the Company's Amended and Restated Code
of Regulations, if adopted, would still prohibit, to the extent permissible
under the GCLO as amended, shareholder action without a meeting.
FIXING THE NUMBER OF DIRECTORS
Under the Current Regulations, shareholders fix the number of
directors to be elected at the annual meeting and such number is to be no less
than three or more than eleven. The New Regulations would fix the number of
directors at twelve and would give the board of directors, by a vote of the
majority of its members, the ability to change the number of directors,
however, such number shall be no less than three. The New Regulations would
allow the shareholders to change the number of directors at an annual meeting
or a special meeting, by the affirmative vote of the holders of a majority of
the shares which are represented at the meeting and entitled to vote on the
proposal. However, no later than 120 days prior to an annual or special
meeting at which shareholders propose to vote to change the number of
directors, notice must be provided to the Company.
The provisions of the New Regulations requiring that shareholders
provide the Company with advanced notice of a proposal to change the number of
directors could make it more difficult to change the composition of the board
of directors even if desired by the shareholders. While this provision is
intended to help preserve continuity of the board of directors, to facilitate
communication with potential nominees and does not divest the shareholders of
the power to change the number of directors, the provision could be deemed to
have an anti-takeover effect. Management is not aware of any effort to change
the composition of the board of directors.
INDEMNIFICATION
The Current Regulations require the Company to indemnify officers and
directors against costs and expenses reasonably incurred in connection with any
claim, suit or proceeding brought against such person by reason of such person
being or having been an officer or director of the Company. Such costs and
expenses are not provided, however, in relation to matters to which such
director or officer has been derelict in the performance of such person's
duties. A director or officer shall be conclusively deemed not to have been
derelict in a matter which has been the subject of a suit or proceeding in
which he was a party disposed of by adjudication on the merits, unless in such
suit or proceeding such officer or director has been adjudged to have been
derelict in the performance of such officer's or director's duties.
The New Regulations would update the Company's current Regulations to
reflect current Ohio law regarding indemnification and would help the Company
retain existing officers and directors and recruit other qualified individuals
to serve as officers and directors of the Company without fear of personal
liability for corporate actions. The New Regulations would require
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indemnification to the fullest extent permitted by Ohio law of any director or
officer, and would allow the Company to indemnify any employee or agent, of the
Company who is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in the right of the
Company, by reason of such person having been a director, officer, employee or
agent of the Company against expenses and amounts paid in settlement actually
and reasonably incurred by such individual in connection with such proceeding.
The New Regulations would also require the Company to indemnify to the
fullest extent permitted by Ohio law any person who was or is a party or
threatened to be made a party to any proceeding by or in the right of the
Company to procure a judgment in its favor, by reason of the fact that such
person is or was a director or officer of the Company, and would allow such
indemnification for employees or agents of the Company, against expenses
actually and reasonably incurred by such person.
To reflect current Ohio law, the New Regulations allow the Company to
advance expenses to any indemnified person as they are incurred, prior to final
disposition of any proceeding, upon receipt of an undertaking by such
indemnified person to repay such amount if it ultimately is determined that he
is not entitled to be indemnified by the Company. The New Regulations also
authorize the Company, in accordance with the GCLO, to purchase and maintain
insurance or similar protection on behalf of any person who is or was a
director, officer, employee or agent of the corporation, whether or not such
person would be entitled to indemnification by the Company. Such insurance may
be purchased from or maintained with a person in which the Company has a
financial interest.
MISCELLANEOUS
The New Regulations are intended to reflect changes in the law of the
State of Ohio since the Current Regulations were adopted in 1966. Other than
those changes addressed above, the differences between the Current Regulations
and the New Regulations are essentially administrative and reflect changes in
the GCLO as well as the elimination of unnecessarily restrictive provisions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ADOPTION OF THE AMENDED AND RESTATED CODE OF REGULATIONS
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PROPOSAL 2--ELECTION OF DIRECTORS
GENERAL
Currently the Company's Code of Regulations provide that the number of
members of the board of directors shall be fixed and determined annually, at
the annual meeting of shareholders, but shall not be less than three nor more
than eleven members. The current number of directors is eleven. In accordance
with Proposal 1, if approved, the number of members of the board of directors
will be twelve, and the board of directors will have the power to change the
number from time to time, but never to be less than three.
If the shareholders do not vote to adopt Proposal 1, then, as to
Proposal 2, by voting to elect the nominees, the shareholders will act to fix
the number of directors of the board of directors at eleven and will vote for
those nominees currently serving as members of the board of directors.
The Board of Directors has nominated Ronald V. Arthur II, George W.
Broughton, Philip E. Cline, Robert E. Evans, Charles R. Hooten, Jr., Marshall
T. Reynolds, Neil W. Scaggs, Philip Todd Shell, Kirby J. Taylor, Paul T.
Theisen and Thomas W. Wright, the Company's incumbent directors, to serve as
directors for another one-year term expiring on April 28, 1999 or until the
election and qualification of their respective successors. In addition, the
Board of Directors has nominated Martin P. Shearer to serve as a director for a
one-year term expiring on April 28, 1999, or until election and qualification
of his successor.
The proxies solicited hereby, unless directed to the contrary therein,
will be voted for the nominees. The nominees have consented to being named in
this Proxy Statement and to serve if elected. The Board of Directors has no
reason to believe that the nominees for election as directors will not be
candidates or will be unable to serve, but if either occurs, it is intended
that the Common Shares represented by proxies will be voted for such
substituted nominees as the Board of Directors, in its discretion, may
designate.
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The following table sets forth certain information regarding the
nominees for election to the Board of Directors, whose terms will expire on
April 28, 1999 or until their successors are elected and qualified. All of the
nominees are presently directors of the Company and all have been elected to
their present terms of office by vote of the shareholders of the Company, with
the exception of Martin P. Shearer, who has been nominated to serve as a
director by the Board of Directors.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DIRECTOR
------------ DURING THE LAST 5 YEARS SINCE
----------------------- -----
<S> <C> <C>
Ronald V. Arthur, II, 38 Vice President and General Manager of the Company's Foods March 1997
Division since July 1992.(1)
George W. Broughton, 40 Executive Vice President, Director of Sales and Marketing April 1984
since 1994; Chief Executive Officer and Chairman of the
Board of Directors from July 1996 to November 1996;
Executive Vice-President from 1989 to 1994.(2)
Philip E. Cline, 64 President and Chief Executive Officer of the Company since November 1996
November 1996. Management Consultant from January 1996 to
November 1996. From 1968 to July 1995, Mr. Cline held
various senior management positions at J.H. Fletcher & Co.
(manufacturer of underground mining equipment).(3)
Robert E. Evans, 57 President, Chief Executive Officer and member of the Board April 1971
of Directors of Peoples Bancorp Inc. since April 1980;
President, Chief Executive Officer and member of the Board
of Directors of The Peoples Banking and Trust Company since
January 1987.(4)
Charles R. Hooten, Jr., 71 President, Hooten Equipment Company since 1976 (wholesale January 1997
distributor of food store, food service and heating and air
conditioning equipment).(5)
Marshall T. Reynolds, 61 Chairman of the Board of the Company since November 1996. November 1996
President, Chief Executive Officer and Chairman of the Board
of Champion Industries, Inc. since 1992 (a commercial
printer and supplier of office products); President and
General Manager of The Harrah & Reynolds Corporation,
predecessor to Champion Industries, Inc., from 1964 (and
sole shareholder from 1972) to present.(6)
</TABLE>
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<TABLE>
<S> <C> <C>
Neil W. Scaggs, 62 President of Baisden Brothers, Inc. since 1961 (retail and January 1997
wholesale hardware).(7)
Martin P. Shearer, 50 Vice-President and General Manager, Southern Belle Division;
President of Southern Belle Dairy Company from December 1985
to December 1997.
Philip Todd Shell, 29 Vice President, Chief Financial Officer and Secretary of January 1997
Caspian Holdings since July 1997 (coal processing
equipment); and Chief Investment Analyst of Guyan
International since January 1991 (hydraulic pumps and
motors).(8)
Kirby J. Taylor, 52 President and Chief Executive Officer of Action Business January 1997
Consulting from November 1997 to present (management
consulting firm); President and Chief Executive Officer of
Nexquest, Inc. from January 1996 to November 1997 (holding
company); President and Chief Operating Officer of Addington
Resources, Inc. from July 1994 to January 1996 (mining and
waste management company); Vice President and Chief
Financial Officer of Outboard Marine Corp. from April 1993
to July 1994 (manufacturer and distributor of boats and
motors); Vice President of Finance of Tenneco Automotive
from August 1990 to April 1993 (manufacturer of auto
parts).(9)
Paul T. Theisen, 67 Of Counsel, Theisen, Brock, Frye, 1Erb & Leeper Co., L.P.A. April 1971
since January 1998. President and a director of the law
firm of Theisen, Brock, Frye, Erb & Leeper Co., L.P.A. from
1983 through 1997.(10)
Thomas W. Wright, 46 Chairman of the Board of Directors of Nexquest, Inc. since January 1997
April 1996. (holding company); Group President, Brand/Rust
Industrial from September 1991 to December 1996 (industrial
cleaning company).(11)
</TABLE>
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(1) Director of the West Virginia Dairy Products Association.
(2) Director of SBR, Inc., Peoples Banking & Trust Company and Peoples
Bancorp., Inc.
(3) Director of McCorkle Machine and Engineering Company, Banc One West
Virginia Corporation, Champion Industries, Inc. and Logan Corporation.
(4) Director of the First National Bank of Southeastern Ohio, Marmac
Corporation and Ohio Banks Association, and the Chairman of the Board
of Directors of Russell Federal Savings Bank.
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(5) Director of Banc One West Virginia Corporation and Banc One
Charleston.
(6) Chairman of the Board of the Radisson Hotel in Huntington, West
Virginia, Chairman of McCorkle Machine and Engineering Company,
Director of the Abigail Adams National Bancorp, Inc., Chairman of the
Board of First Guaranty Bank, and Chairman of the Board of Premier
Financial Bancorp.
(7) Director of Banc One West Virginia Corporation, Champion Industries,
Inc. and Logan Corporation.
(8) Director, Innovative Screen Technology Inc. and American Centrifuge
Inc.
(9) Director, Thomas Bradford Shirt Company; former Director, and
executive officer of AxisTech Warehouse, Inc. and former Chief
Executive Officer of Mid-American Spring Air, Inc. (each of which
filed for protection under the federal bankruptcy laws in February
1998 and March 1998, respectively).
(10) Director of Peoples Bancorp, Inc., The Peoples Banking and Trust
Company and First National Bank of Southeastern Ohio.
(11) Director, Thomas Bradford Shirt Company; former Chairman of the Board
of Directors, Mid-American Spring Air, Inc. (see note 9 above).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE NOMINEES NAMED HEREIN.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held fourteen meetings during 1997. All of the
then incumbent directors were present for at least seventy-five percent of the
meetings of the Board of Directors and the committees of the Board of Directors
on which they serve.
The Compensation Committee of the Board of Directors (the
"Compensation Committee") presently consists of Messrs. Evans, Reynolds, Scaggs
and Theisen. The Compensation Committee is responsible for the determination
of the compensation for the Company's directors and officers and recommends
policies relating to the Company's benefits plans. The Compensation Committee
held two meetings in 1997.
The Audit Committee of the Board of Directors (the "Audit Committee")
has certain duties relating to the year-end audit, the Company's internal
accounting controls and the Company's relationship with its independent
auditors. Messrs. Hooten, Shell and Taylor are the current members of the
Audit Committee. No Audit Committee meetings were held in 1997.
The Board of Directors does not have a nominating or committee
performing similar functions. The Board of Directors will consider stockholder
recommendations for directors timely given in writing to the Secretary of the
Company prior to the meeting.
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COMPENSATION OF DIRECTORS
Each of the Company's directors received, during 1997, $500 for each
meeting of the Board personally attended by him (other than meetings held by
telephone conference as to which no fee is paid). Directors of the Company are
reimbursed for their expenses in attending meetings of the Board of Directors.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information as to compensation paid for
services rendered to the Company by the President and Chief Executive Officer
for each of the two fiscal years ended December 31, 1996 and 1997. No other
executive officer of the Company received total annual salary and bonus in
excess of $100,000.
<TABLE>
<CAPTION>
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LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
SECURITIES
- -------------------------------------------------------------------------------------------------------------------
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ($) ($) (#) ($)(2)
- -------------------------------------------------------------------------------------------------------------------
Philip E. Cline 1997 80,004 - - 5,000
President and Chief 1996 - - - -
Executive Officer (1)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Cline began serving as President and Chief Executive
Officer of the Company as of November 18, 1996.
(2) This represents fees paid to Mr. Cline for serving on the
Company's Board of Directors.
EMPLOYMENT AGREEMENT
During 1997, the Company entered into an employment agreement (the
"Employment Agreement") with Martin P. Shearer in connection with the Company's
acquisition of the Southern Belle Dairy Company. Under the Employment
Agreement, which is terminable at the will of either party after 30 days
written notice, Mr. Shearer is entitled to an annual base salary of
approximately $80,000, an annual bonus of 4% of the net pre-tax profits of the
Southern Belle division of the Company and certain customary benefits. Under
the Employment Agreement, Mr. Shearer is subject to certain customary
non-compete conditions for a period of two years after a termination of his
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employment with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Evans, Reynolds, Scaggs and Theisen currently serve as the
members of the Compensation Committee. The Compensation Committee establishes
salaries, incentives and other forms of compensation for the Company's
directors and officers and recommends policies relating to the Company's
benefit plans.
The Company received legal services from the law firm of Theisen,
Brock, Frye, Erb & Leeper Co., L.P.A. Mr. Paul Theisen, a member of the
Company's Board of Directors, is the President and a director of the law firm.
The Company's distribution center in Ashland, Kentucky is leased from
the ADJ Corporation for $9,350 a month, subject to adjustment after April 1,
2002, based on a specified consumer price index. The lease expires on April
30, 2007. The ADJ Corporation is controlled by certain immediate family
members of Mr. Marshall T. Reynolds, Chairman of the Company's Board of
Directors. Lease expense for 1997 totaled $74,800.
The Company purchased office supplies and printing services, from
certain divisions of Champion Industries, Inc., a company controlled by Mr.
Marshall T. Reynolds, Chairman of the Company's Board of Directors. Such
purchases totaled $107,000 during 1997.
REPORT ON COMPENSATION OF EXECUTIVE OFFICERS
The Company makes an effort to offer competitive compensation packages
that allow the Company to attract and retain highly qualified individuals. The
Compensation Committee believes the long-term strategic goals of the Company
can be accomplished only if the Company employs management with experience and
skills relevant to the changing nature of the Company's products, sales and
marketing efforts. A not insubstantial portion of the total compensation of
each executive officer, other than the Chief Executive Officer, is
incentive-based in order to motivate the Company's executive officers in the
performance of their duties and to encourage a continued focus on Company
profitability. For those executive officers responsible for particular
production divisions of the Company, the financial and non-financial results of
their divisions are also considered. The Compensation Committee believes that
by emphasizing performance based compensation, it will encourage the Company's
management to act in concert with the interests of the Company's shareholders.
The Company currently does not maintain any long-term incentive plans and does
not grant stock appreciation rights, stock options or restricted stock awards,
but is presently considering the implementation of an incentive stock plan.
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<PAGE> 15
Compensation packages offered to the Company's senior management are
thought to be competitive within the dairy food industry. The Compensation
Committee believes the compensation packages for its senior management are
competitive with compensation packages for executives of other public domestic
dairy food companies based on the size and current structure of the
organization and are based on the discretion of the Compensation Committee.
The Compensation Committee meets with the President to evaluate the performance
of the other executive officers and meets in the absence of the President to
evaluate his performance. The Compensation Committee reports its executive
evaluations to the other outside members of the Board.
Mr. Cline's salary for 1997 was established by the Compensation
Committee to be an acceptable base salary and is not tied to any objective
standards of the Company's stock performance or earnings in 1997. Mr. Cline
may also be eligible for a bonus from time to time based on various objective
and subjective standards as may be established by the Compensation Committee.
Mr. Cline did not receive a bonus in 1997.
The overall compensation of each of the Company's executive officers
(other than Mr. Cline) consists of two principal elements:
BASE SALARY
Executive officers' base salaries are reviewed annually by the
Compensation Committee. In the case of all executive officers, their base
salary is their principal element of compensation. In an effort to ensure that
the Company can obtain the talent it needs to effectuate its long-term
strategies, the base salary of all executive officers has been set at a level
that is thought to be competitive within the group of public businesses
identified as similar to the Company and adjusted accordingly based on the
current size and structure of the Company. Factors considered in establishing
base salaries include the requisite skill and experience required in a
particular position, the range of duties and responsibilities attributable to
that position, the individual's prior experience and compensation, the
compensation of similarly situated individuals in the dairy food industry and
the overall past and expected future contributions of the individual.
Generally, in establishing such salaries, the greatest weight is given to
ensuring that a competitive salary level is established. Overall, the process
is subjective, with no precise, mathematical weight given to the enumerated
factors.
ANNUAL BONUS
The Company operates an annual bonus plan. As of September 1, 1997,
the general managers of the Southern Belle Division, the Dairy Division and the
Foods Division are entitled to an annual bonus of 4% of the net pre-tax profits
of their respective divisions. The bonus element of each executive officer's
compensation is set at a level that the Compensation Committee believes is
necessary to compensate executive officers for the achievement of short-term
goals forming part of the Company's overall strategic objectives. Short-term
sales, profit and performance goals for each
- 13 -
<PAGE> 16
division and for the Company as a whole are developed annually and in advance
by the Company's management and then reviewed by the Company's Board of
Directors. Performance is monitored against established goals throughout the
year.
Marshall T. Reynolds
Robert E. Evans
Neil W. Scaggs
Paul T. Theisen
- 14 -
<PAGE> 17
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT
Set forth below is a table showing certain information with respect to
those persons known to the Company to be the beneficial owners of more than 5%
of the outstanding Common Shares, each director of the Company and all
executive officers and directors of the Company as a group as of February 28,
1998. The address for each person listed below is c/o Broughton Foods Company,
210 North Seventh Street, Marietta, Ohio 45750.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned
Beneficial Owner Directly or Indirectly(1) Percent of Class %
---------------- ---------------------- ------------------
<S> <C> <C>
Marshall T. Reynolds(2) 1,294,910 22.4
Philip E. Cline(3) 220,000 3.8
George W. Broughton(4) 131,250 2.3
Ronald V. Arthur, II 3,000 *
Robert E. Evans 3,000 *
Charles R. Hooten, Jr.(5) 240,000 4.2
Neil W. Scaggs(6) 234,000 4.1
Philip Todd Shell 9,000 *
Kirby J. Taylor(7) 33,990 *
Paul T. Theisen 3,000 *
Thomas W. Wright(8) 308,010 5.3
All directors and executive officers 2,553,535 44.2
as a group (13)
</TABLE>
- ---------------------
* Indicates beneficial ownership of less than 1% of the issued and
outstanding Common Shares.
(1) Calculated pursuant to Rule 13d-3(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Under
Rule 13d-3(d), shares not outstanding which are subject to
options, warrants, rights or conversion privileges exercisable
within 60 days are deemed outstanding for the purpose of
- 15 -
<PAGE> 18
calculating the number and percentage owned by such person,
but not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed. As of February
28, 1998, the Company had 5,774,335 Common Shares issued and
outstanding.
(2) Includes 435,000 shares held by Mr. Reynolds' wife and
children, 4,050 shares held by ADJ Corporation (an entity
controlled by certain immediate family members of Mr.
Reynolds), 6,150 shares held by Champion Leasing Corporation
(an entity which holds shares over which Mr. Reynolds
effectively exercises sole voting and investment power) and
78,440 shares held by Harrah & Reynolds Corporation (an entity
which holds shares over which Mr. Reynolds effectively
exercises sole voting and investment power).
(3) Includes 24,000 shares held by Mr. Cline's family members and
12,000 shares held in trust over which Mr. Cline disclaims
beneficial ownership.
(4) Includes 29,250 shares held by Mr. Broughton's children.
(5) Includes 12,000 shares held by Mr. Hooten's children and
12,000 shares held in trust or in other forms of indirect
ownership over which shares Mr. Hooten effectively exercises
sole voting and investment power.
(6) Includes 27,000 shares held by Mr. Scaggs' family members and
12,000 shares held in trust over which shares Mr. Scaggs
effectively exercises sole voting and investment power.
(7) Includes 450 shares held by Mr. Taylor's children.
(8) Includes 300,000 shares held in trust over which shares Mr.
Wright effectively exercises sole voting and investment power
and 8,010 shares held by Mr. Wright's family members.
- 16 -
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the cumulative total return of the
Company's Common Shares during the period commencing December 9, 1997, to
December 31, 1997, with the Standard & Poor's 500 Stock Index (the "S&P 500
Index") and a peer group index (the "Dairy Products Stocks Index") of United
States companies within Standard Industrial Codes 2020 to 2029 (dairy
products). The S&P 500 Index includes 500 United States companies in the
industrial, transportation, utilities and financial sectors and is weighted by
market capitalization. The graph depicts the results of investing $100 in the
Common Shares, the S&P 500 Index and the Dairy Products Stocks Index at closing
prices on December 31, 1997.
[INSERT GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
SHAREHOLDER VALUE AT FISCAL YEAR END
- ---------------------------------------------------------------------------------------------
12/9/97 12/31/97
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
BROUGHTON FOODS COMPANY 100.000 112.000
- ---------------------------------------------------------------------------------------------
S&P 500 INDEX 100.000 99.450
- ---------------------------------------------------------------------------------------------
DAIRY PRODUCTS STOCKS INDEX 100.000 107.630
- ---------------------------------------------------------------------------------------------
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 1997, to the knowledge of the Company and except as noted
below, each of the Company's directors, executive officers and 10% shareholders
filed all reports relating to the Common Shares required under Section 16(a) of
the Exchange Act.
In connection with the Company's initial public offering, Form 3's
were inadvertently filed two days late on behalf of each of Messrs. Arthur,
Broughton, Cline, Evans, Fry, Hooten, Reynolds, Scaggs, Shell, Taylor, Theisen
and Wright.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of the Company for the year
ending December 31, 1997 have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants.
- 17 -
<PAGE> 20
Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the meeting with the opportunity to make a statement if they desire to do
so, and are expected to be available to respond to appropriate questions.
The Board of Directors selects the independent accountants for the
Company each year. The Board of Directors intends to continue the services of
Coopers & Lybrand L.L.P. for the fiscal year ending December 31, 1998.
OTHER BUSINESS
The Company does not presently know of any matters that will be
presented for action at the Annual Meeting other than those set forth herein.
If other matters properly come before the Annual Meeting, proxies submitted on
the enclosed form will be voted by the persons named in the enclosed form of
proxy in accordance with their best judgment.
ANNUAL REPORTS
The Company's Annual Report to Shareholders is enclosed with this
Proxy Statement. The Company also has filed with the Securities and Exchange
Commission an Annual Report on Form 10-K for the fiscal year ended December 31,
1997. Copies of the Annual Report on Form 10-K are available upon written
request to the Company at its principal executive office, 210 North Seventh
Street, Marietta, Ohio 45750, Attention: Corporate Secretary. The Annual
Report on Form 10-K and the Annual Report to Stockholders are not part of these
proxy solicitation materials.
1998 ANNUAL MEETING OF SHAREHOLDERS
It presently is contemplated that the annual meeting of shareholders
following fiscal year 1998 will be held on or about April 28, 1999. Under the
current rules of the Securities and Exchange Commission, in order for any
appropriate stockholder proposal to be considered for inclusion in the proxy
materials of the Company for the fiscal year 1998 annual meeting of
shareholders, the shareholder must meet certain eligibility requirements and
the proposal must be received by the Secretary of the Company no later than
December 2, 1998, preferably sent by certified mail, return receipt requested.
By Order of the Board of Directors
/s/ DAVID J. BROUGHTON
David J. Broughton
Corporate Secretary
- 18 -
<PAGE> 21
Exhibit A
BROUGHTON FOODS COMPANY
AMENDED AND RESTATED CODE OF REGULATIONS
Effective as of _____ __, 1998
ARTICLE I
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of shareholders
of the corporation for the election of directors, the consideration of reports
to be laid before such meeting, and the transaction of such other business as
may properly be brought before such meeting shall be held on a date and at a
time, either within or without the State of Ohio, as may be fixed by the board
of directors, annually, and specified in the notice of the meeting.
SECTION 2. Special Meetings. Special meetings of the
shareholders of the corporation may be held on any day, when called by the
chairman of the board, or by the president, or, in case of the president's
absence, death or disability, by the vice president authorized to exercise the
authority of the president, or by the board of directors acting at a meeting,
or by a majority of the directors acting without a meeting, or by the person or
persons who hold at least fifty per cent of all the shares outstanding and
entitled to vote thereat. Upon request in writing delivered to the president
or the secretary by any persons entitled to call a meeting of shareholders,
such officer shall forthwith cause to be given to the shareholders entitled
thereto notice as set forth in Section 3 of this Article I, below.
SECTION 3. Notice of Meetings. Not less than seven (7) or more
than sixty (60) days before the date fixed for a meeting of shareholders,
written notice stating the time, place, and purposes of such meeting shall be
given by or at the direction of the president, secretary or assistant
secretary, or any other person or persons required or permitted by these
regulations to give such notice. The notice shall be given by personal
delivery or by mail to each shareholder entitled to notice of the meeting who
is of record as of the day next preceding the day on which notice is given or,
if a record date therefor is duly fixed, of record as of said date; if mailed,
the notice shall be addressed to the shareholders at their respective addresses
as they appear on the records of the corporation. Notice of the time, place,
and purposes of any meeting of shareholders may be waived in writing, either
before or after the holding of such meeting, by any shareholders, which writing
shall be filed with or entered upon the record of the meeting. The attendance
of any shareholder at any such meeting without protesting, prior to or at the
commencement of the meeting, the lack of proper notice shall be deemed to be a
waiver by him of notice of such meeting.
SECTION 4. Quorum; Adjournment. Except as may be otherwise
provided by law or by the Articles of Incorporation, at any meeting of the
shareholders the holders of shares entitling them to exercise a majority of the
voting power of the corporation present in person or by proxy shall constitute
a quorum for such meeting; provided, however, that
<PAGE> 22
no action required by law, by the Articles of Incorporation, or by these
Regulations to be authorized or taken by a designated proportion of the shares
of any particular class or of each class of the corporation may be authorized
or taken by a lesser proportion; and provided, further, that the holders of a
majority of the voting shares represented thereat, whether or not a quorum is
present, may adjourn such meeting from time to time; if any meeting is
adjourned, notice of such adjournment need not be given if the time and place
to which such meeting is adjourned are fixed and announced at such meeting.
SECTION 5. Proxies. Persons entitled to vote shares or to act
with respect to shares may vote or act in person or by proxy. Without
affecting any vote previously taken, the person appointing a proxy may revoke a
revocable appointment by a later appointment received by the corporation or by
giving notice of revocation to the corporation in writing or in open meeting
prior to the voting of such proxy. The presence at a meeting of the person
appointing a proxy does not revoke the appointment.
SECTION 6. Action without a Meeting. Except as provided in
Article VIII, shareholders of the Corporation may not take any action without a
meeting duly called.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number. The number of directors of the Corporation
shall be twelve (12). Notwithstanding the foregoing, the board of directors
may change the number of directors, from time to time by resolution adopted by
a majority of the board of directors, provided, however, that in no event shall
the number of directors be less than three (3). The number of directors may be
changed by the shareholders at an annual meeting or a special meeting called
for the purpose of changing the number of directors, at which a quorum is
present, by the affirmative vote of the holders of a majority of the shares
which are represented at the meeting and entitled to vote on the proposal.
Prior to an annual meeting at which a shareholder or shareholders propose to
vote to change the number of directors or a special meeting of shareholders
called by shareholders for the purpose of changing the number of directors as
permitted by Section 2 of Article I, the shareholder or shareholders who wish
make such proposal to change the number of directors at an annual meeting or
who call such special meeting are required to provide notice to the Corporation
of the intention to make such proposal or call such special meeting no later
than 120 days prior to the intended meeting date.
SECTION 2. Election of Directors; Vacancies. The directors
shall be elected at each annual meeting of shareholders or at a special meeting
called for the purpose of electing directors. At a meeting of shareholders at
which directors are to be elected, only persons nominated as candidates shall
be eligible for election as directors and the candidates receiving the greatest
number of votes shall be elected, assuming that a quorum is present. In the
event of the occurrence of any vacancy or vacancies in the board of directors,
however caused, the remaining directors, though less than a majority of the
whole authorized number of directors, may, by the vote of a majority of their
- 2 -
<PAGE> 23
number, fill any such vacancy for the unexpired term. No reduction in the
number of directors shall of itself have the effect of shortening the term of
any incumbent director.
SECTION 3. Term of Office; Resignations. Each director shall
hold office until the next annual meeting of the shareholders and until his
successor is elected, or until his earlier resignation, removal from office or
death. Any director may resign at any time by oral statement to that effect
made at a meeting of the board of directors or in a writing to that effect
delivered to the secretary, such resignation to take effect immediately or at
such other time as the director may specify. Directors of the corporation may
be removed in accordance with the law of the State of Ohio.
SECTION 4. Organization Meeting. Immediately after each annual
meeting of the shareholders, the newly elected directors shall hold an
organization meeting for the purpose of electing officers and transacting any
other business. Notice of such meeting need not be given.
SECTION 5. Regular Meetings. Regular meetings of the board of
directors may be held at such times and places within or without the State of
Ohio as may be provided for in resolutions adopted by the board of directors
and upon notice, if any, as shall be so provided.
SECTION 6. Special Meetings. Special meetings of the board of
directors may be held at any time within or without the State of Ohio upon call
by the chairman of the board or the president or by not less than one-third of
the directors. Notice of the time and place of each such meeting shall be
served upon, telephoned or facsimiled to each director at least twenty-four
hours, or mailed or telegraphed to each director at his address as shown on the
books of the corporation at least forty-eight hours prior to the time of the
meeting, which notice need not specify the purposes of the meeting; provided,
however, that attendance of any director at any such meeting without
protesting, prior to or at the commencement of the meeting shall be deemed to
be a waiver by him of notice of such meeting; and such notice may be waived in
writing, either before or after the holding of such meeting, by any director,
which writing shall be filed with or entered upon the records of the meeting.
Unless otherwise indicated in the notice thereof, any business may be
transacted at any organization, regular or special meeting.
SECTION 7. Quorum; Adjournment. A quorum of the board of
directors shall consist of a majority of the directors then in office.
Provided, that a majority of the directors present at a meeting duly held,
whether or not a quorum is present, may adjourn such meeting from time to time;
if any meeting is adjourned, notice of such adjournment need not be given if
the time and place to which such meeting is adjourned are fixed and announced
at such meeting. At each meeting of the board of directors at which a quorum
is present, all questions and business shall be determined by a majority vote
of those present except as in these regulations otherwise expressly provided.
SECTION 8. Action Without a Meeting. Any action which may be
authorized or taken at a meeting of the board of directors may be authorized or
taken without a meeting with the affirmative vote or approval of, and in a
writing or writings signed by,
- 3 -
<PAGE> 24
all of the directors, which writing or writings shall be filed with or entered
upon the records of the corporation.
SECTION 9. Committees. The board of directors may at any time
appoint from its members an executive or other committee or committees,
consisting of such number of members, not less than three, as the board of
directors may deem advisable, together with such alternates as the board of
directors may deem advisable, to take the place of any absent member or members
at any meeting of such committee. Each such member and each such alternate
shall hold office during the pleasure of the board of directors. Any such
committee shall act only in the intervals between meetings of the board of
directors and shall have such authority of the board of directors as may, from
time to time, be delegated by the board of directors, except the authority to
fill vacancies in the board of directors or in any committee of the board of
directors. Subject to the aforesaid exceptions, any person dealing with the
corporation shall be entitled to rely upon any act or authorization of an act
by any such committee, to the same extent as an act or authorization of the
board of directors. Each committee shall keep full and complete records of all
meetings and actions, which shall be open to inspection by the directors.
Unless otherwise ordered by the board of directors, any such committee may
prescribe its own rules for calling and holding meetings, and for its own
method of procedure, and may act at a meeting by a majority of its members or
without a meeting by a writing or writings signed by all of its members.
ARTICLE III
OFFICERS
SECTION 1. Election and Designation of Officers. The board of
directors shall elect a president, a secretary, a treasurer, and, in its
discretion, may elect one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as the
board of directors may deem necessary. Any two or more of such offices may be
held by the same person, but no officer shall execute, acknowledge, or verify
any instrument in more than one capacity, if such instrument is required to be
executed, acknowledged, or verified by two or more officers.
SECTION 2. Term of Office; Vacancies. The officers of the
corporation shall hold office, subject to the pleasure of the board of
directors, until their successors are elected, except in case of resignation,
removal from office, or death. The board of directors may remove any officer
at any time with or without cause by a majority vote of the directors then in
office, subject to contract rights. Any vacancy in any office may be filled by
the board of directors.
SECTION 3. Authority and Duties of Officers. The officers of
the corporation shall have such authority and shall perform such duties as are
customarily incident to their respective offices or as may be specified from
time to time by the board of directors, regardless of whether such authority
and duties are customarily incident to such office.
- 4 -
<PAGE> 25
SECTION 4. Delegation of Authority and Duties. The board of
directors is authorized to delegate the authority and duties of any officer to
any other officer and generally to control the action of the officers and to
require the performance of duties to those mentioned herein.
ARTICLE IV
COMPENSATION
SECTION 1. Directors and Members of Committees. Members of the
board of directors and members of any committee of the board of directors
shall, as such, receive such compensation, which may be either a fixed sum for
attendance at each meeting of the board of directors, or at each meeting of the
committee, or stated compensation payable at intervals, or shall otherwise be
compensated as may be determined by or pursuant to authority conferred by the
board of directors or any committee of the board of directors, which
compensation may be in different amounts for various members of the board of
directors or any committee. No member of the board of directors and no member
of any committee of the board of directors shall be disqualified from being
counted in the determination of a quorum or from acting at any meeting of the
board of directors or of a committee of the board of directors by reason of the
fact that matters affecting his own compensation as a director, member of a
committee of the board of directors, officer, or employee are to be determined.
SECTION 2. Officers. The compensation of officers of the
corporation, or the method of fixing such compensation, shall be determined by
or pursuant to authority conferred by the board of directors or any committee
of the board of directors. Such compensation may include pension, disability,
and death benefits, and may be by way of fixed salary, or on the basis of
earnings of the corporation, or any combination thereof, or otherwise, as may
be determined or authorized from time to time by the board of directors or any
committee of the board of directors.
ARTICLE V
INDEMNIFICATION
SECTION 1. Third Party Actions. The corporation shall indemnify
to the fullest extent permissible under the laws of the State of Ohio as
currently in effect or hereinafter amended any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action, suit, or proceeding by or in the right of
the corporation, by reason of the fact that he is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, domestic or foreign, nonprofit or
for profit, a limited liability company, or a partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, decrees, fines, penalties, and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit, or
proceeding. The right to indemnification conferred in this Article V shall be
a contract
- 5 -
<PAGE> 26
right and shall not be affected adversely as to any director of officer by any
amendment to this Amended and Restated Code of Regulations with respect to any
action or inaction occurring prior to such amendment.
SECTION 2. Derivative Actions. The corporation shall indemnify
to the fullest extent permissible under the laws of the State of Ohio as
currently in effect or hereinafter amended any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action or suit, by or in the right of the corporation to procure a judgment in
its favor, by reason of the fact that he is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, domestic or foreign, nonprofit or
for profit, a limited liability company, or a partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit.
SECTION 3. Advances of Expenses. Expenses of each person
indemnified under this Article V incurred in defending a civil, criminal,
administrative, or investigative action, suit, or proceeding or threat thereof,
may be paid by the corporation, as they are incurred, in advance of the final
disposition of such action, suit, or proceeding as authorized by the directors
in the specific case, upon receipt of an undertaking by or on behalf of the
person indemnified, to repay such amount if it ultimately is determined that he
is not entitled to be indemnified by the corporation.
SECTION 4. Employees and Agents. The corporation may, to the
extent authorized from time to time by the board of directors, grant rights to
indemnification, and to the advancement of expenses, to any employee or agent
of the corporation (or any person serving at the corporation's request as a
trustee, manager, member, employee or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust or other enterprise) or to any person who is
or was a director, officer, employee or agent of a constituent corporation
absorbed by the corporation as a director, trustee, officer, employee or agent
of another enterprise, in each case as determined by the board of directors to
the fullest extent of the provisions of this Article V in cases of the
indemnification and advancement of expenses of directors and officers of the
corporation, or to any lesser extent (or greater extent, if permitted by law)
as determined by the board of directors.
SECTION 5. Non-Exclusivity; Heirs. The indemnification provided
by this Article V shall not be deemed exclusive of, and shall be in addition
to, any other rights granted to those seeking indemnification under the
Articles, these regulations, any agreement, a vote of shareholders or
disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding their offices or
positions, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, member, manager or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person.
SECTION 6. Purchase of Insurance. The corporation may purchase
and maintain insurance or similar protection on behalf of any person who is or
was a director,
- 6 -
<PAGE> 27
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, manager,
member or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership, joint venture, trust, or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article V. Insurance may be purchased from or
maintained with a person in which the corporation has a financial interest.
SECTION 7. Severability. In the event that any of the
provisions of this Article V (including any provision within a single section,
paragraph or sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, the remaining provisions are
severable and shall remain enforceable to the full extent permitted by law.
ARTICLE VI
RECORD DATES
For any lawful purpose, including, without limitation, the
determination of the shareholders who are entitled to receive notice of or to
vote at a meeting of shareholders, receive payment of any dividend or
distribution, receive or exercise rights of purchase or subscription for, or
exchange or conversion of, shares or other securities, subject to contract
rights with respect thereto, or participate in the execution of written
consents, waivers, or releases, the board of directors may fix a record date in
accordance with the provisions of the Ohio General Corporation Law. The record
date for the purpose of the determination of the shareholders who are entitled
to receive notice of or to vote at a meeting of shareholders shall continue to
be the record date for all adjournments of such meetings, unless the board of
directors or the persons who shall have fixed the original record date shall,
subject to the limitations set forth in the Ohio General Corporation Law, fix
another date, and, in case a new record date is so fixed, notice thereof and of
the date to which the meeting shall have been adjourned shall be given to
shareholders of record as of such date in accordance with the same requirements
as those applying to a meeting newly called. The board of directors may close
the share transfer books against transfers of shares during the whole or any
part of the period provided for in this Article VI, including the date of the
meeting of shareholders and the period ending with the date, if any, to which
adjourned. If no record date is fixed therefor, the record date for
determining the shareholders who are entitled to receive notice of, or to vote
at, a meeting of shareholders shall be the date next preceding the day on which
notice is given, or the date next preceding the day on which the meeting is
held, as the case may be.
ARTICLE VII
CERTIFICATES FOR SHARES
SECTION 1. Form of Certificates and Signatures. Subject to
Section 2 of this Article VII, each holder of shares shall be entitled to one
or more certificates, signed by
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<PAGE> 28
the chairman of the board or the president or a vice president and by the
secretary, an assistant secretary, the treasurer, or an assistant treasurer of
the corporation, which shall certify the number and class of shares held by him
in the corporation, but no certificate for shares shall be executed or
delivered until such shares are fully paid. When such a certificate is
countersigned by an incorporated transfer agent or registrar, the signature of
any of said officers of the corporation may be facsimile, engraved, stamped, or
printed. Although any officer of the corporation whose manual or facsimile
signature is affixed to such a certificate ceased to be such officer before the
certificate is delivered, such certificate nevertheless shall be effective in
all respects when delivered.
SECTION 2. Uncertificated Shares. The Board of Directors may
provide by resolution that some or all of a series of any or all classes of
shares of the Corporation shall be uncertificated shares as permitted by Ohio
law.
SECTION 3. Transfer of Shares. Shares of the corporation shall
be transferable upon the books of the corporation by the holders thereof, in
person, or by a duly authorized attorney, upon surrender and cancellation of
certificates for a like number of shares of the same class or series, with duly
executed assignment and power of transfer endorsed thereon or attached thereto,
and with such proof of the authenticity of the signatures to such assignment
and power of transfer as the corporation or its agents may reasonably require.
SECTION 4. Lost, Stolen, or Destroyed Certificates. The
corporation may issue a new certificate for shares in place of any certificate
theretofore issued by it and alleged to have been lost, stolen, or destroyed,
and the board of directors may, in its discretion, require the owner, or his
legal representatives, to give the corporation a bond containing such terms as
the board of directors or the president or a vice president and the secretary
or the treasurer may require to protect the corporation or any person injured
by the execution and delivery of a new certificate.
SECTION 5. Transfer Agent and Registrar. The board of directors
may appoint, or revoke the appointment of transfer agents and registrars and
may require all certificates for shares to bear the signatures of such transfer
agents and registrars, or any of them.
ARTICLE VIII
AMENDMENTS
The regulations of the corporation may be amended, or new regulations
may be adopted, by the shareholders at a meeting held for such purpose, by the
affirmative vote of the holders of shares entitling them to exercise a majority
of the voting power on such proposal or without a meeting by the written
consent of the holders of shares entitling them to exercise two-thirds of the
voting power on such proposal. If the regulations are amended or new
regulations are adopted without a meeting of the shareholders, the secretary of
the corporation shall mail a copy of the amendment or the new regulations to
- 8 -
<PAGE> 29
each shareholder who would have been entitled to vote thereon and did not
participate in the adoption thereof.
- 9 -
<PAGE> 30
<TABLE>
<S> <C>
[x] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ----------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR
BROUGHTON FOODS COMPANY
- ----------------------------------------------------- For Against
1. Adoption of the Amended and [ ] [ ] [ ]
Mark box at right if an address change or [ ] Restated Code of Regulations
comment has been noted on the reverse side
of this card. 2. Election of Directors. For All With- For All
Nominees held except
RECORD DATE SHARES: Marshall T. Reynolds, Philip E. Cline, [ ] [ ] [ ]
George W. Broughton, Ronald V. Arthur,
II, Robert E. Evans, Charles R. Hooten,
Jr., Neil W. Scaggs, Philip Todd Shell,
--------------------- Kirby J. Taylor, Paul T. Theisen,
Please be sure to sign and date Date Thomas W. Wright, Martin P. Shearer
- -----------------------------------------------------
this Proxy. INSTRUCTION: To Withhold authority to vote for any nominee, mark the
- ------Shareholder sign here----Co-owner sign here---- "For All Except" box and write that nominee's name on the above line
DETACH CARD 3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
</TABLE>
<PAGE> 31
BROUGHTON FOODS COMPANY
ANNUAL MEETING OF STOCKHOLDERS - APRIL 29, 1998
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned does hereby appoint Philip E. Cline and Todd R. Fry, and each
of them, proxies of the undersigned, with full power of substitution in each of
them, to vote at the Annual Meeting of Stockholders of Broughton Foods Company
to be held on April 29, 1998 at 11:00 a.m., and at any and all adjournments
thereof, with respect to all shares which the undersigned would be entitled to
vote and with all powers which the undersigned would possess if personally
present, as follows on the reverse side, and in their discretion upon all other
matters brought before the meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 ON THE
REVERSE SIDE.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- -----------------------------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the reverse side of this card. Joint owners should
each sign personally. Trustees and other fiduciaries should indicate the capacity in which they
sign, and where more than one name appears, a majority must sign. If a corporation or partnership,
this signature should be that of an authorized officer should state his or her title.
- -----------------------------------------------------------------------------------------------------
<S> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------------- ----------------------------------------
- --------------------------------------------- ----------------------------------------
- --------------------------------------------- ----------------------------------------
</TABLE>
